The accounting staff at Taiwan Manufacturing have prepared the following summary of account balances at year end. The balances include all transactions for the fiscal year except for closing entries.
|
Account |
Balance |
Account |
Balance |
|
Cash |
$1,850 |
Sales Revenue |
$7,600 |
|
Merchandise |
8,435 |
Cost of Goods Sold |
2,840 |
|
Supplies |
2,955 |
Wages Expense |
1,015 |
|
Prepaid Insurance |
1,375 |
Utilities Expense |
550 |
|
Equipment |
9,650 |
Depreciation Expense |
660 |
|
Accumulated Depreciation |
4,100 |
Insurance Expense |
495 |
|
Interest Payable |
425 |
Supplies Expense |
525 |
|
Notes Payable |
7,000 |
Interest Expense |
300 |
|
Owners’ Equity |
11,525 |
a. What is the purpose of closing the books?
b. Prepare all necessary closing entries.
c. After all closing entries are entered into the accounting system, what will be the amount of owners’ equity reported on the balance sheet?